A Companion to Rare Coin Collecting - Introduction

Interested in rare coins? Do you want to start a rare coin collection?
I wrote A Companion to Rare Coin Collecting for a group of investment
advisors who needed a booklet that introduced basic concepts of
the art of rare coin collecting.

As to the question, "why is this book offered free?"
Simply put, there are too many other better books about rare coin
collecting that were written by well-known numismatists (see the
'Suggested Reading' list below). Nevertheless, since its public
release to the Web in 1997, this text has been read by more than
a quarter of a million readers hailing from Australia, Europe, and
the U.S. Numerous webmasters and editors from all sorts of hobby
sites, including prominent search engines such as Ask Jeeves, InfoSeek,
Lycos, and AOL, have selected this book for their particular venues
dealing with coins and hobbies. As a result, Companion is widely
read by thousands of new collectors each week. I wish all of you
the very best of luck - but most of all have fun.

What Kind of Collector
Are YOU?

I have met many collectors - each with their own set of responses
to the question, "Why do you collect rare coins?"
However diverse, their answers formed three basic "personalities
of coin collecting."

The Incidental Collector is the most pervasive of
all personalities because her collection begins with the spare
change that collects in the dresser drawer or in the bowl
on the bookshelf until it graduates into a bucket then, in
some extreme cases, a water bottle or some other large container
that sits in the corner of the bedroom. This collection will
grows until someone accidentally kicks the bucket over once
too many times or until the water bottle finally breaks from
the sheer weight of all that metal.

Sometimes the incidental collector is struck by what I call
the 'lottery effect." A story that happened a few years
ago exemplifies this tract. A clerk working at a convenience
store on Hollywood Boulevard was bored. To occupy some time,
he began sorting the coins in the change drawer. He ran across
an old penny that had been discolored from years of handling,
but he noticed that there was something wrong with the stamping.
After completing his shift, the clerk did some research and
was stunned to find that he was the proud owner of a famed
'double stamp' 1955 penny worth more than $3,000.

Stories like that do more to convert many incidental collectors
into instant 'hard core' investors - or something with that
appearance, at any rate. The very idea that chance fortune
lay hidden somewhere in our pocket change is enough to set
off a flurry of book buying and frantic inquires to coin dealers.
In extreme cases, the 'lottery effect' can also trigger hysteric
sorting and hoarding. For example, there are online rumors
about the famed 'state quarters' that are circulating around
the Internet faster than forwarded email jokes. Apparently,
many people are taking these ill-advised advisories seriously.
Dealers acknowledge that coins for Delaware, Pennsylvania,
and New Jersey are now in short supply - thus in high value
- however the higher value is simply due to the fact that
so many incidental collectors are hoarding.

Ultimately, the incidental collector is faced with a choice:
either get serious and organize the mess, or get real and
dump the coins into the counting hopper. If he gets real,
then worst case, he'll be rid of the inconvenience and end
up with enough spendable currency to buy something nice for
himself or his niece. If he or she gets that streak of seriousness
then gangway for the next personality, that of The Investor
Collector.

For many years, financial consultants have been advising
their clients to hold coins. Their reasoning is simple: rare
coins have been known to be an even-tempered and reliable
investing tool because coin values seem to keep pace with
other investing classes such as stocks, bonds, funds, and
real estate. The value performance of rare coins is actually
more predictable than the precious metals they are made from
largely because value for metals is based upon a much wider
range of factors than coins. It is also possible that rare
coins can offer a form of 'wealth insurance' by retaining
value when high inflation or low interest rates weaken paper
currency values.

As for other collectibles, nothing performs as well as coins
when it comes down to pure investing: coins are virtually
indestructible, they are easy to store, easier to insure,
and rare coins are highly portable commodities that can be
easily converted into liquid assets. One of the drawbacks
for investing in rare coins is that one must possess the liquid
assets to acquire the right type of coins (not all coins are
'value investment' rated). But as the old saying goes, "one
step at a time."

This leads us to the third and final personality: The Professional
Collector. Rare coins are interesting because their rarity
makes them precious and fascinating. Surely, the more that
a specimen is sought after the greater its price tag, but
for some collectors that's an incidental fact in a much larger
story. For them, the supreme pleasure and thrill of discovery
motivates a lifetime of collecting. They have a deep appreciation
for the art and a history not found in your average run-of-the-mill
water bottle collection. Note also that some avid coin collectors
are not coin collectors at all, but numismatists - people
who study all forms of monetary value including coins, but
also paper money, tokens, commemorative medals, even checks,
stock certificates, and notes of financial obligation.

The bottom line for coin collecting is that this is not the
way to 'get rich quick' - in fact, there is nothing about
coin collecting that is quick at all. It takes patience, much
learning, lots of reading, and some amount of luck to grow
a collection. Unless you are already uncommonly wealthy, it'll
take a very long time to see your collection come to any sort
of value. If you are looking for the fast track for riches,
I suggest the lottery or arbitrage. If you are looking for
a rewarding hobby that teaches history, culture, and the growth
of civilization, then coin collecting might be for you.

About the Author: Ray Wyman, Jr. is a freelance
writer who has been working in the publishing industry since
1975. He began his career as a professional marketing communications
practitioner in 1980 and started freelancing in 1984. He is
the author of "The Art of Jack Kirby" (1993, Blue
Rose Press), "Tales from the American Civil War"
(unpublished), "A Companion to Rare Coin Collecting"
(1988, IRC&B), "Promoting Your Organization"
(1995, NetDay96), and "Achieving Vision" (1990,
The Inventioneering Project). He is a veteran storywriter
for the Star Trek franchise and is the owner and chief editor
of Heavypen